Financial Audit:

Savings Association Insurance Fund's 1991 and 1990 Financial Statements

AFMD-92-72: Published: Jun 30, 1992. Publicly Released: Jun 30, 1992.

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Robert W. Gramling
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GAO reviewed the Savings Association Insurance Fund's (SAIF): (1) financial statements for the years ended December 31, 1991, and 1990; and (2) internal control structure and compliance with applicable laws and regulations.

GAO found that: (1) the financial statements presented fairly, in all material respects, the SAIF financial position for the years then ended, in conformity with generally accepted accounting principles; (2) as of December 31, 1991, SAIF reported an $87-million fund balance; (3) SAIF financial statements reflected a $21-million loss attributable to the failure of Oakar banks, or banks that acquired thrifts' deposits; (4) the financial condition of the thrift industry improved in 1991, but economic uncertainties will continue to affect SAIF exposure to potential insurance losses; (5) it is uncertain whether insurance assessments and Treasury payments, the two primary revenue sources for SAIF, will be sufficient to enable SAIF to carry out its responsibilities and achieve its net worth goals; (6) the Federal Deposit Insurance Corporation (FDIC), which administers SAIF, proposed an assessment rate increase to help SAIF reach its designated reserve ratio of 1.25 percent of its insured deposits; (7) FDIC lacks an adequate process for estimating potential insurance losses for SAIF, particularly those posed by failures of smaller Oakar banks; and (8) FDIC does not consistently follow its policies and procedures for time and attendance reporting.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: FDIC's Division of Finance (DOF) has developed procedures to analyze small Oakar banks by comparing all insured Oakar banks, large and small, to those banks identified by DOF as more likely than not to fail each calendar quarter. These procedures were implemented during calendar year 1992.

    Recommendation: The Chairman, FDIC, should direct the Director, Division of Accounting and Corporate Services, to develop and implement procedures for performing an in-depth analysis of small Oakar banks, to ensure that FDIC accurately estimates potential insurance losses for SAIF.

    Agency Affected: Federal Deposit Insurance Corporation

  2. Status: Closed - Implemented

    Comments: During 1993, FDIC issued improved time and attendance reporting procedures and issued related additional guidance. However, GAO's financial audits found that these required procedures and guidance were not always followed, resulting in deficiencies similar to those previously identified. GAO issued a revised recommendation in its 1993 audit report (GAO/AIMD-94-135) to correct this weakness.

    Recommendation: The Chairman, FDIC, should direct FDIC division and office heads to enforce the policies and procedures documented in the FDIC Time and Attendance Reporting Directive to ensure that employees' time charges are valid and that payroll expenses are charged to the correct fund.

    Agency Affected: Federal Deposit Insurance Corporation


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